Some 8 km off the coast of Sabah, Labuan was originally part of the Sultanate of Brunei and most travellers use it as a stopover between the two. With its deep-water harbour, it was of strategic importance for the British, who used the previously uninhabited island as a base for operations against piracy. The Sultan of Brunei ceded Labuan to Britain in 1846 under the governance of Rajah James Brooke, and two years later it became a Crown Colony. The island was also used as a penal colony and played a major role during the Second World War. In 1984 Labuan was declared a tax-free haven – or ‘International offshore financial centre’ – and hence this small tropical island with just 80,000-odd inhabitants has a plethora of banks and investment companies. For the casual visitor – rather than someone wanting to salt away their million – it offers the attraction of being clean and compact, with good hotels, lots of duty-free shopping, a golf course, sport fishing and diving.
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